2016 Drug Trend Report MEDICARE

Transcription

1 2016 Drug Trend Report MEDICARE

2 2016 Drug Trend Report Medicare Introduction 3 Trend analysis 6 Keeping spending increases in check for America s seniors 7 Medicare Advantage Prescription Drug Plan (MAPD) 8 Prescription Drug Plan (PDP) 9 HOW TO USE THIS PDF Click on the titles across the top to jump to that section Employee Group Waiver Plan (EGWP) 10 Trend for low-income cost sharing subsidy (LICS) and non-lics beneficiaries 11 Click on Click on to see expanded information, including tables to exit expanded information Therapy class review 12 Top 15 therapy classes and insights 13 Top 10 traditional drugs 19 Top 10 specialty drugs 23 Trend comparison for Medicare and commercial populations 27 Methodology 29 EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 2

3 Introduction

4 Affordable pharmacy care for America s seniors For more than a decade, the Medicare Part D benefit has provided America s seniors with affordable access to prescription medications at a sustainable rate. Since its beginnings as a discount card program, Part D has cost the government less than originally predicted. 1 Part D plans have effectively kept drug spending increases in check for this population a trend that continued in 2016 with just a 4.1% increase in year-over-year prescription drug spending. Interestingly, a third of plans had negative trend and more than half show trend below 4.1%. However, Part D plans spent close to 3,700 per member per year (PMPY) on prescription drugs for Medicare beneficiaries in 2016 more than three times the PMPY spend seen in commercial, Medicaid and Exchange populations. The high PMPY demonstrates the challenges of managing prescription costs for an older and sicker population. While competitive forces do drive down costs, there are requirements that limit the tools Part D plans can use to even more effectively drive down costs. For example: Protected classes of drugs (PCDs) The Centers for Medicare & Medicaid Services (CMS) requires plan sponsors to cover all, or substantially all, PCD medications, which include drugs for cancer, HIV, and mental and neurological disorders, among others. This means plans are unable to put benefit strategies in place to drive down cost and promote effective utilization. 2 Recently, CMS suggested that manufacturers are keeping the cost of certain drugs high because of current PCD coverage requirements. A 2015 Express Scripts study found that oncology prescriptions for Medicare beneficiaries cost an average of 875 more per prescription than those for commercial members, despite both groups exhibiting similar adherence rates. 3 Formulary requirements Due to strict CMS formulary and medication coverage requirements, Medicare plan sponsors may have limited ability to impact spending when new therapies hit the market, or when drugs experience significant price increases. For example, a number of convenience co-packaged kits (packages that contain multiple products with both Part D and non-part D covered components) were marked up significantly during Our data showed that covering those products for just one six-month period resulted in 1.2 million in unnecessary costs 4 to plans and taxpayers. 1 Medicare Part D Spending Trends: Understanding Key Drivers and the Role of Competition 2 Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs; Proposed Rule. Federal Register 79 (6 Jan. 10, 2016) 88, pp Express Scripts Internal Research Report. 4 Express Scripts Internal Medicare Analysis.

5 Low-Income Cost Sharing Subsidy (LICS) population Medicare s LICS members generally have a lower medication utilization rate than their non-lics counterparts. As the industry proposes better ways to help these members stay adherent to their medications, recommendations have been made to Congress to consider altering LICS benefits to reduce or eliminate cost sharing for certain types of drugs. 5 The Congressional Budget Office (CBO) projects that simply increasing generic utilization among LICS members could save the Medicare program 18 billion over 10 years. 6,7 Opioid management The opioid epidemic continues to remain a key national focus. Although overall Medicare trend for drugs that treat pain and inflammation has decreased, utilization rates for Medicare remain higher than in any other line of business. Utilization rates for short-term opiates (17.3%) were higher for Medicare compared to commercial (12.0%) and Medicaid (7.6%). Long-term opiate use was also much higher (17.3%) than for commercial (3.3%) and Medicaid (3.6%). 8 Note that our analysis includes individuals who received opioids for pain associated with cancer. Quality Star Ratings Star Ratings that focus on adherence to medications commonly used for treating diabetes, hypertension and high blood cholesterol play a key role in driving trend. In 2016, all three classes saw average adherence rates increase for MAPD plans and PDPs, with an average adherence rate of 80.2% for MAPDs and 79.9% for PDPs in 2017 Star Ratings. 9 Express Scripts-supported plans, MAPD and PDP, proved to have higher Star Ratings than the industry average. As adherence expectations increase and potentially expand to more expensive classes of drugs, we expect these classes to remain top Medicare trend drivers. The percentage of Americans older than age 65 is expected to grow. With Medicare spending representing 15% of the U.S. federal budget, lawmakers are understandably looking to reduce prescription drug spending, and make changes to keep this benefit affordable and sustainable for taxpayers. We believe plans with greater flexibility for the use of PBM tools can help position Part D plans further manage drug trend in this population. With a few modifications that will allow Part D providers to fully leverage programs and solutions proven to lower drug spending, Medicare Part D plan can continue on this successful path, providing seniors with high quality, affordable prescription drug coverage. I know there is no other PBM better suited to support SCAN for the Medicare space we serve. Talent wins games but teamwork wins championships, and with Express Scripts over the past couple years we ve won championships with the quality network pilot, preferred value network, strong 1/1 implementation and the CMS program audit. Sharon K. Jhawar PharmD, MBA, CGP CVP & Chief Pharmacy Officer SCAN Health Plan Rebecca M. Rabbitt Vice President, Medicare Express Scripts 5 Medicare Payment Advisory Commission. Report to the Congress: Medicare and the health care delivery system. June Accessed Jan. 20, The Medicare Payment Advisory Commission. Report to the Congress: Medicare and the Health Care Delivery System. reports/june-2016-report-to-the-congress-medicare-and-the-health-care-delivery-system.pdf?sfvrsn=0. p Jun. 15, Accessed Feb. 01, Congressional Budget Office. Proposals for Health Care Programs-CBO s Estimate of the President s Fiscal Year 2017 Budget. default/files/114th-congress /dataandtechnicalinformation/51431-healthpolicy.pdf. p. 3. Mar. 29, Accessed Feb. 01, Henderson R, Le Gette L, Swift C, Iyengar R. The painful reality of pain treatment. Express Scripts Internal Analysis. 9 Express Scripts Internal Medicare Analysis.

6 Trend analysis EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 6

7 Keeping spending increases in check for America s seniors From 2015 to 2016, per-member-per-year (PMPY) spending for Medicare plans rose just 4.1% to 3, This low trend increase was driven by a 2.7% rise in unit costs and 1.4% growth in utilization. Traditional therapeutic classes accounted for 71.9% of the total spend for Medicare beneficiaries; specialty classes accounted for the remaining 28.1%. 1, SPECIALTY 3, TOTAL PMPY* SPEND 2, TRADITIONAL Traditional Specialty Total 6.2 % 1.4 % 1.4 % Utilization trend -0.3 % 6.5 % % % 1.1 % 12.7 % Unit cost trend Total trend Analysis of Medicare trend by brand and generic classification found that utilization of brand drugs decreased 7.7% but unit costs increased 12.2%, resulting in an overall trend of 4.5%. Spending for generic drugs increased 3.3%, mainly due to a 3.0% lift in utilization and 0.3% rise in unit cost. 1, GENERIC 3, TOTAL PMPY* SPEND 2, BRAND Brand Generic Total 12.2 % % 1.4 % 2.7 % % 4.5 % 3.3 % 0.3 % Utilization trend Unit cost trend Total trend -7.7 % January-December 2016 compared to same period in 2015 for Medicare members with drug coverage provided by Express Scripts plan sponsors. Reflects total cost for both payers and patients, net of rebates. EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 7

8 MEDICARE ADVANTAGE PRESCRIPTION DRUG PLAN MAPD GENERIC FILL RATE 89.0 % PMPY SPEND 2, UTILIZATION 1.5 % UNIT COST 0.1 % TOTAL TREND 1.6 % PMPY spend of 1, stemmed from a 2.4% decline in unit cost that was countered partially by a 1.4% increase in PMPY utilization. Traditional drug spend decreased 1.0%. Specialty PMPY spend rose to , a 9.3% increase over The 8.9% increase in unit costs outweighed the 6.5% decrease in utilization for brand medications, leading to a total brand drug trend of 2.4% SPECIALTY 2, TOTAL SPEND 1, TRADITIONAL Traditional Specialty Total 9.3 % 1.4 % 3.0 % 6.3 % 1.5 % 0.1 % 1.6 % Utilization Unit cost -1.0 % Trend -2.4 % Brand Generic Total Generic drug trend was minimal (0.1%), resulting from an increase in utilization (2.5%) and an offsetting decline in unit cost (-2.4%). The generic fill rate for MAPD plans was highest compared to PDPs and EGWPs GENERIC 2, TOTAL SPEND 1, BRAND -6.5 % 2.5 % Utilization Unit cost -2.4 % January-December 2016 compared to same period in 2015 for Medicare members with drug coverage provided by Express Scripts plan sponsors. Reflects total cost for both payers and patients, net of rebates. EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE % 1.5 % 0.1 % 1.6 % 2.4 % 0.1 % Trend

9 PRESCRIPTION DRUG PLAN PDP GENERIC FILL RATE 85.8 % PMPY SPEND 5, UTILIZATION 2.2 % UNIT COST 2.5 % TOTAL TREND 4.7 % Traditional drug spend increased 3.4%, to 3,863.10, driven primarily by a 2.3% utilization increase. 1, SPECIALTY Traditional Specialty Total Specialty spending increased 8.2%, largely due to a 6.6% unit cost increase. 5, TOTAL SPEND 2.3 % 1.6 % 2.2 % 1.1 % 6.6 % 4.7 % 2.5 % 3.4 % 8.2 % Brand and generic drug spend increased in almost equal measure, by 4.9% and 4.2%, respectively. 3, TRADITIONAL Utilization Unit cost Trend While a 9.8% trend in unit cost was offset somewhat by a 4.9% decline in utilization for brands, the generic drug trend was boosted by a 3.6% increase in utilization and a 0.6% rise in unit cost. PDPs had the highest generic utilization trend among the three Medicare plan types 1, GENERIC Total % % 3.6 5, % 2.2 % 2.5 % 4.2 % TOTAL SPEND 4, BRAND Brand -4.9 % Utilization Generic 9.8 % 0.6 % Unit cost January-December 2016 compared to same period in 2015 for Medicare members with drug coverage provided by Express Scripts plan sponsors. Reflects total cost for both payers and patients, net of rebates. EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 9 Trend

10 EMPLOYEE GROUP WAIVER PLAN EGWP GENERIC FILL RATE 85.4 % PMPY SPEND 3, UTILIZATION 0.1 % UNIT COST 2.5 % TOTAL TREND 2.6 % For traditional drugs, EGWPs experienced a 2.0% decrease in PMPY spend to 2, The 16.8% increase in specialty spending was due largely to a 10.3% lift in specialty drug utilization, the highest among the three Medicare plan types. The 13.0% rise in unit cost for brand drugs was offset by an 11.0% decline in utilization. The 4.0% generic drug spending increase was driven by growth in both utilization and unit cost. 1, SPECIALTY 3, TOTAL SPEND 2, TRADITIONAL Traditional Specialty Total 16.8 % 10.3 % 0.1 % 6.5 % 2.5 % 2.6 % 0.1 % Utilization Unit cost Trend -2.1 % -2.0 % Brand Generic Total Most of the overall utilization increase was due to generics, while most of the overall unit cost increase was contributed by brands. EGWPs had the highest specialty drug trend among the three Medicare plan types. 1, GENERIC 3, TOTAL SPEND 2, BRAND % 2.4 % Utilization Unit cost January-December 2016 compared to same period in 2015 for Medicare members with drug coverage provided by Express Scripts plan sponsors. Reflects total cost for both payers and patients, net of rebates. EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE % % % 4.0% 0.1 % 2.5 % 2.6 % Trend

11 Trend for low-income cost sharing subsidy (LICS) and non-lics beneficiaries In 2016, the number of Medicare Part D beneficiaries across the U.S. receiving a low-income cost sharing subsidy (LICS) increased from 11.7 to 12.0 million, or approximately three in 10 enrollees. Nearly two-thirds of LICS members were enrolled in stand-alone PDPs. 10 PMPY spend for LICS members was more than double that of non-lics members in both traditional and specialty classes. Although utilization trend was lower in the LICS population, overall drug spend was significantly higher. Traditional drug spending decreased 1.4% for non-lics members and remained relatively flat (0.8%) for LICS members. Utilization trend was lower for LICS members, while non-lics members had a decrease in spending for traditional therapies (-2.4%). Both utilization and unit cost trends for specialty medications were lower for LICS members (-2.3% and 4.9%) compared to non-lics members (7.3% and 7.4%). The increase in total specialty drug spending was considerably lower for LICS members (2.6%) than non-lics members (14.7%). These trends reinforce recommendations by the industry that plan sponsors need the ability to offer LICS members low-to-no-cost options that could promote adherence and better contain drug costs in this population. LICS BENEFICIARIES: COMPONENTS OF TREND , SPECIALTY NON-LICS BENEFICIARIES: COMPONENTS OF TREND , TOTAL SPEND SPECIALTY 4, TRADITIONAL 3, TOTAL SPEND 2, TRADITIONAL Traditional Specialty Total 0.4 % 0.4 % -2.3 % Utilization 0.4 % 4.9 % Unit cost Traditional Specialty Total 1.0 % 7.3 % Utilization 1.0 % 7.4 % Unit cost -2.4 % 0.9 % 1.7 % 2.6 % 0.8 % Trend 14.7 % Trend -1.4 % 1.3 % 2.7 % 10 Hoadley J, Cubanski J, Neuman T. Medicare Part D in 2016 and trends over time. The Henry J. Kaiser Family Foundation. Sept. 16, Accessed Jan. 20, January-December 2016 compared to same period in 2015 for Medicare members with drug coverage provided by Express Scripts plan sponsors. Reflects total cost for both payers and patients, net of rebates. EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 11

12 Therapy class review EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 12

13 Top 15 therapy classes and insights MEDICARE: COMPONENTS OF TREND FOR TOP 15 THERAPY CLASSES Total spend for Medicare plans rose 4.1%, to 3, in 2016, as a result of small increases in both PMPY utilization (1.4%) and unit costs (2.7%). Ten of the top 15 therapeutic classes ranked by overall Medicare PMPY spend in 2016 were traditional classes and five were specialty. Together, spend for the top three Medicare therapy classes diabetes, oncology, and pain and inflammation contributed 27.1% of the total for all medications used by Medicare beneficiaries in Total trend was negative for seven of the top 15 therapy classes, with the sharpest decline for hepatitis C medications (-27.2%). Excluding the slight decrease in PMPY utilization trend (-0.2%) for high blood cholesterol, utilization trend increased for all traditional therapy classes for Medicare beneficiaries. However, seven of these traditional therapy classes decreased in unit cost trend from 2015 to RANKED BY 2016 PMPY* SPEND TREND RANK TYPE THERAPY CLASS PMPY SPEND UTILIZATION UNIT COST TOTAL 1 T Diabetes % 8.4% 11.6% 2 S Oncology % 8.3% 22.3% 3 T Pain/inflammation % -5.6% -1.3% 4 T High blood cholesterol % -2.0% -2.2% 5 T High blood pressure/heart disease % -4.5% -4.0% 6 T Mental/neurological disorders % -16.6% -12.9% 7 S Inflammatory conditions % 16.4% 24.6% 8 T Asthma % -0.6% 4.3% 9 S Multiple sclerosis % 7.9% 6.5% 10 T Anticoagulants % 27.4% 30.9% 11 T Heartburn/ulcer disease % -10.5% -10.0% 12 S Hepatitis C % -2.8% -27.2% 13 T Urinary disorders % -5.8% -4.0% Diabetes, oncology and pain/inflammation accounted for 27.1 % of the total spend. 14 T Chronic obstructive pulmonary disease (COPD) % 6.1% 9.3% 15 S HIV % 14.9% 15.8% TOTAL FOR ALL THERAPY CLASSES 3, % 2.7% 4.1% S = Specialty, T = Traditional EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 13

14 The highest increase (27.4%) in unit cost trend was for anticoagulants, which also saw an uptick in utilization (3.5%), as prescribers became more comfortable prescribing newer, more expensive oral anticoagulants. The largest decline in unit cost (-16.6%) was for mental and neurological disorders, since most of the commonly prescribed medications for that class are available as generics. Although specialty medications represented only a little more than one-quarter of total Medicare drug spend, their contribution to trend was significant. In 2016, specialty spend increased 12.7%, driven by nearly equal trends of 6.5% for unit cost and 6.2% for PMPY utilization. Ranked by PMPY spend, the top five specialty therapy classes oncology, inflammatory conditions, multiple sclerosis (MS), hepatitis C and HIV together contributed more than 76% of total specialty spend. Three of these therapy classes oncology, inflammatory conditions and HIV saw double-digit increases in 2016 PMPY spend, due to increases in both unit cost and PMPY utilization. Two of them oncology and HIV are among the PCDs mandated by CMS. The double-digit decline in drug spend for hepatitis C was largely due to decreased utilization trend (-24.4%), as many patients who were prescribed newer therapies had completed treatment. A smaller decrease in unit costs (-2.8%) was also a contributor. Oncology, inflammatory conditions and HIV saw double-digit increases in spend due to increases in both unit cost and utilization. HIGHLIGHTS Diabetes saw a much higher PMPY spend (439.39) than any other therapy class among Medicare beneficiaries in Trend for diabetes medications was 11.6%, driven by an increase in utilization (3.2%) and an even greater increase in unit costs (8.4%). Increases in utilization for the widely used oral drug metformin, along with glimepiride and Januvia (sitagliptin), drove up overall utilization for this therapy class. Insulins, such as Lantus (insulin glargine) and Humalog KwikPen (insulin lispro), also had large utilization increases. Oncology treatments continued to have one of the highest trends among specialty therapy classes, with an increase in PMPY spend of 22.3% in Trend resulted from an 8.3% increase in unit cost and a 14.0% increase in utilization. The utilization increase likely resulted from several factors, including expanded indications for several drugs; continued development of newer, more targeted therapies; increased survival rates of patients living with cancer; and the resulting continuing medication therapy and the PCD status of the class. Total PMPY spend for medications used to treat pain/inflammation decreased 1.3%, due to declining unit costs (-5.6%) that more than offset a moderate increase in utilization (4.3%). PMPY spend continued to decline because generic medications dominate the class. Together, the three most commonly used pain and inflammation drugs captured nearly half of market share for the therapy class. Overall trend in high blood cholesterol declined (-2.2%), influenced by a small decrease in utilization (-0.2%) and a larger drop in unit costs (-2.0%). Even so, the class was the fourth most-costly therapy class overall and third most-expensive traditional class in Medicare. Its trend was heavily influenced by wide availability of generic medications, which represent 90.6% of class market share. Trend for inflammatory conditions increased 24.6%. PMPY utilization increased substantially (8.2%), but the main driving factor for the increased trend was the 16.4% increase in unit costs for this specialty class. Spend for all of the leading inflammatory condition drugs increased in 2016, with an average cost per prescription of 3, Together, EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 14

15 the top two drugs, Enbrel (etanercept) and Humira Pen (adalimumab), captured more than 60% of market share for the class. They represented more than 7% of overall specialty market share as well. Additionally, unit costs for each increased by 17% or more in Biosimilars have been FDA approved for Humira and Enbrel and are expected to hit the market in the next few years. Overall utilization trend was influenced by increased utilization of several drugs, including Humira Pen, Otezla (apremilast) and Stelara (ustekinumab). Total trend for multiple sclerosis (MS) medications was 6.5%, overwhelmingly due to an increase in unit cost (7.9%). Overall trend was influenced by unit cost increases (ranging between 3.6% and 12.9%) for the top eight most-prescribed medications in the class, which accounted for approximately 93% of spend. Copaxone (glatiramer), which is the most widely used, had the highest spend in the class. Since its launch in June 2015, Glatopa (glatiramer), a generic alternative for Copaxone s 20mg/mL dosage form, captured 3.2% of the 2016 MS market share in Medicare. Together, Enbrel and Humira Pen captured more than 60 % of market share for inflammatory conditions. EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 15

16 MAPD: COMPONENTS OF TREND FOR TOP 15 THERAPY CLASSES MAPD Among all three Medicare plan types, MAPD plans had the lowest increases in PMPY spend (1.6%) and unit cost (0.1%) in Traditional classes occupied 11 of the top 15 classes ranked by PMPY spend. Trend for eight of the top 15 classes was negative, mostly due to decreased unit costs. Depression replaced HIV in the top 15 rankings compared to overall Medicare rankings. Except for the chronic obstructive pulmonary disease (COPD) and heartburn/ulcer disease utilization trends (-1.2% and -0.2%, respectively), all other traditional classes among the top 15 saw a slight to moderate increase in utilization. At 4.7%, anticoagulants had the highest utilization increase among traditional classes. Hepatitis C was the only specialty class among the top 15 classes to see a decrease in unit cost (-1.1%), which, when coupled with the large drop in utilization (-24.9%), resulted in a total trend of -26.0%. Except for oncology, all specialty classes in the top 15 saw utilization decreases. Oncology drugs had the largest bump in utilization among the top 15 therapy classes for MAPDs (12.7%). RANKED BY 2016 PMPY* SPEND TREND RANK TYPE THERAPY CLASS PMPY SPEND UTILIZATION UNIT COST TOTAL 1 T Diabetes % 5.5% 8.5% 2 S Oncology % 8.7% 21.4% 3 T High blood pressure/heart disease % -5.9% -4.4% 4 T Pain/inflammation % -6.0% -4.2% 5 T High blood cholesterol % -7.3% -5.8% 6 T Asthma % -3.7% -2.2% 7 S Multiple sclerosis % 8.9% 1.2% 8 T Anticoagulants % 28.1% 32.8% 9 T Mental/neurological disorders % -21.6% -18.9% 10 S Inflammatory conditions % 16.4% 15.9% 11 S Hepatitis C % -1.1% -26.0% 12 T Urinary disorders % -7.4% -3.8% 13 T COPD % 5.2% 4.0% 14 T Heartburn/ulcer disease % -7.6% -7.8% 15 T Depression % -2.3% 1.8% MAPDs had the lowest increase in PMPY spend among Medicare plan types in S = Specialty, T = Traditional TOTAL FOR ALL THERAPY CLASSES 2, % 0.1% 1.6% EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 16

17 PDP: COMPONENTS OF TREND FOR TOP 15 THERAPY CLASSES PDP PDPs had the highest overall PMPY trend increase (4.7%), driven in nearly equal measure by increases in utilization (2.2%) and unit cost (2.5%). The top 15 therapy classes accounted for more than 70% of total PMPY spend for PDPs, even though 10 of the classes were traditional. Seven of the top 15 therapy classes saw double-digit increases in trend in PMPY spend for diabetes drugs was nearly double that of the next highest therapy class, oncology. Compared to overall Medicare, the seizures class replaced urinary disorder drugs in the top 15 among PDPs. PMPY spend for seizures increased 11.8%, driven by substantial increases in both unit costs (7.9%) and utilization (3.9%). RANKED BY 2016 PMPY* SPEND TREND RANK TYPE THERAPY CLASS PMPY SPEND UTILIZATION UNIT COST TOTAL 1 T Diabetes % 11.5% 16.2% 2 S Oncology % 8.5% 21.8% 3 T Mental/neurological disorders % -13.8% -11.2% 4 T Pain/inflammation % -6.8% -0.4% 5 T High blood cholesterol % -2.5% -4.3% 6 T High blood pressure/heart disease % -0.8% -0.4% 7 S Hepatitis C % -1.8% -27.9% 8 T Asthma % 4.4% 13.0% 9 S HIV % 13.0% 9.2% 10 S Multiple sclerosis % 7.5% 6.1% 11 S Inflammatory conditions % 17.9% 38.1% 12 T Heartburn/ulcer disease % -0.6% 2.0% 13 T Anticoagulants % 31.2% 32.4% The top 15 therapy classes accounted for more than 70 % of total PMPY spend for PDPs. 14 T COPD % 7.1% 18.5% 15 T Seizures % 7.9% 11.8% TOTAL FOR ALL THERAPY CLASSES 5, % 2.5% 4.7% S = Specialty, T = Traditional EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 17

18 EGWP: COMPONENTS OF TREND FOR TOP 15 THERAPY CLASSES EGWP Traditional drugs dominated the top 15 therapy classes by spend for EGWPs; only three specialty classes were among the top 15. Two traditional classes depression and ophthalmic conditions replaced two specialty classes hepatitis C and HIV when compared to overall Medicare top 15 classes. Two of the top 15 classes inflammatory conditions and anticoagulants saw doubledigit increases in trend due to increases in unit costs. Conversely, two of the top 15 classes heartburn and ulcer disease, and mental and neurological disorders had decreases of over 20% in trend, largely due to declining unit costs. RANKED BY 2016 PMPY* SPEND TREND RANK TYPE THERAPY CLASS PMPY SPEND UTILIZATION UNIT COST TOTAL 1 S Oncology % 7.9% 23.9% 2 T Diabetes % 4.5% 6.5% 3 T High blood cholesterol % 1.5% 1.3% 4 T High blood pressure/heart disease % -6.5% -6.5% 5 S Inflammatory conditions % 14.7% 21.1% 6 T Pain/inflammation % -5.6% -4.8% 7 T Anticoagulants % 24.3% 29.0% 8 T Heartburn/ulcer disease % -19.4% -21.2% 9 T Asthma % -6.2% -4.1% 10 T Urinary disorders % -3.8% -1.8% 11 S Multiple sclerosis % 6.1% 7.0% 12 T Mental/neurological disorders % -22.6% -23.2% Traditional drugs dominated the top 15 therapy classes by spend for EGWPs. 13 T COPD % 2.0% 0.1% 14 T Depression % -6.6% -3.3% 15 T Ophthalmic conditions % 4.4% 5.2% TOTAL FOR ALL THERAPY CLASSES 3, % 2.5% 2.6% S = Specialty, T = Traditional EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 18

19 Top 10 traditional drugs All of the top 10 traditional drugs by PMPY spend for Medicare in 2016 were brand medications. Together, they accounted for 20.6% of PMPY spend for all of Medicare s traditional therapy drugs. Three diabetes treatments Lantus, Januvia and Humalog KwikPen were among the 10 most costly traditional therapies for Medicare beneficiaries when ranked by PMPY spend. All three medications had increased trend, with Humalog KwikPen having the highest trend of 21.2%. Together, they captured 7.6% of PMPY spend for all traditional therapy drugs used by Medicare beneficiaries in The only two brand drugs in the top 10 that decreased in unit cost trend were Lantus (-4.6%) and Humalog KwikPen (-8.6%). However, utilization increased for both 7.8% for Lantus and 29.8% for Humalog KwikPen. MEDICARE: TOP 10 TRADITIONAL DRUGS RANKED BY 2016 PMPY* SPEND TREND RANK DRUG NAME THERAPY CLASS PMPY SPEND % OF TOTAL TRADITIONAL SPEND UTILIZATION UNIT COST TOTAL 1 Lantus (insulin glargine) Diabetes % 7.8% -4.6% 3.2% 2 Spiriva (tiotropium) COPD % -3.2% 5.8% 2.6% 3 Advair Diskus (fluticasone/salmeterol) Asthma % -11.6% 4.0% -7.6% 4 Januvia (sitagliptin) Diabetes % 5.0% 1.9% 6.9% 5 Xarelto (rivaroxaban) Anticoagulants % 10.9% 8.2% 19.1% 6 Eliquis (apixaban) Anticoagulants % 72.6% 5.7% 78.3% 7 Lyrica (pregabalin) Pain/inflammation % 3.9% 12.2% 16.1% 8 Zetia (ezetimibe) High blood cholesterol % -7.3% 19.1% 11.8% 9 Humalog KwikPen (insulin lispro) Diabetes % 29.8% -8.6% 21.2% 10 Crestor (rosuvastatin) High blood cholesterol % -51.7% 17.6% -34.1% EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 19

20 The oral anticoagulants Eliquis (apixaban) and Xarelto (rivaroxaban) had the highest (78.3%) and third-highest total trends (19.1%) among the traditional top 10 drugs. Increases in spending for these drugs were driven largely by 72.6% and 10.9% increases in PMPY utilization, respectively. Utilization declined significantly for some of the top 10 brands. Spiriva (tiotropium), a COPD medication, was down by 3.2%; Advair Diskus (fluticasone propionate/salmeterol), an asthma medication, by 11.6%; and Zetia (ezetimibe) and Crestor (rosuvastatin), high blood cholesterol treatments, by 7.3% and 51.7%, respectively. Both Zetia and Crestor faced generic competition in MAPD By PMPY spend, four of the top 10 drugs were for diabetes and two were anticoagulants. PMPY utilization for the top insulin, Lantus, increased 7.3% in Another insulin product, NovoLog FlexPen (insulin aspart injection), replaced Crestor in the top 10 traditional drugs. While Eliquis, an oral anticoagulant, had the highest increase in PMPY utilization (87.3%), the highest increase in unit cost (16.1%) was observed for Zetia, a high blood cholesterol medication. MAPD: TOP 10 TRADITIONAL DRUGS RANKED BY 2016 PMPY* SPEND TREND RANK DRUG NAME THERAPY CLASS PMPY SPEND % OF TOTAL TRADITIONAL SPEND UTILIZATION UNIT COST TOTAL 1 Lantus (insulin glargine) Diabetes % 7.3% -8.0% -0.7% 2 Spiriva (tiotropium) COPD % -6.1% 5.8% -0.3% 3 Xarelto (rivaroxaban) Anticoagulants % 17.4% 4.7% 22.1% 4 Advair Diskus (fluticasone/salmeterol) Asthma % -14.1% 0.6% -13.5% 5 Eliquis (apixaban) Anticoagulants % 87.3% 0.6% 87.9% 6 Januvia (sitagliptin) Diabetes % 6.6% 0.3% 6.9% 7 Zetia (ezetimibe) High blood cholesterol % -8.9% 16.1% 7.2% 8 NovoLog FlexPen (insulin aspart injection) Diabetes % 6.3% 7.7% 14.0% 9 Lyrica (pregabalin) Pain/inflammation % 2.4% 11.4% 13.8% 10 Humalog KwikPen (insulin lispro) Diabetes % 3.7% 4.9% 8.6% EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 20

21 PDP Three medications Nexium (esomeprazole magnesium), Renvela (sevelamer carbonate) and Sensipar (cinacalcet) replaced Xarelto, Eliquis and Zetia among the top 10 traditional medications when compared to overall Medicare. Nexium is used for treatment of heartburn/ulcer disease; Renvela is used to treat patients with chronic kidney disease (CKD) receiving dialysis, while Sensipar is used for treatment of secondary hyperparathyroidism in adult patients with CKD on dialysis. All of the top 10 traditional drugs were brand-name medications in Utilization of Nexium decreased 19.1%, dwarfing its unit cost rise of 2.6% to result in a total trend of -16.5%. Renvela captured 56.2% of market share in its class. All of the top 10 drugs were brands in PDP: TOP 10 TRADITIONAL DRUGS RANKED BY 2016 PMPY* SPEND TREND RANK DRUG NAME THERAPY CLASS PMPY SPEND % OF TOTAL TRADITIONAL SPEND UTILIZATION UNIT COST TOTAL 1 Lantus (insulin glargine) Diabetes % 9.8% -2.4% 7.4% 2 Humalog KwikPen (insulin lispro) Diabetes % 14.3% 13.0% 27.3% 3 Advair Diskus (fluticasone/salmeterol) Asthma % -12.4% 8.9% -3.5% 4 Januvia (sitagliptin) Diabetes % 2.6% 7.5% 10.1% 5 Crestor (rosuvastatin) High blood cholesterol % -29.9% 16.4% -13.5% 6 Lyrica (pregabalin) Pain/inflammation % 3.3% 13.6% 16.9% 7 Spiriva (tiotropium) COPD % 3.1% 6.8% 9.9% 8 Nexium (esomeprazole magnesium) Heartburn/ulcer disease % -19.1% 2.6% -16.5% 9 Renvela (sevelamer carbonate) Kidney disease % -0.7% 16.1% 15.4% 10 Sensipar (cinacalcet) Endocrine disorders % 12.1% 21.4% 33.5% EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 21

22 EGWP In 2016, the top 10 medications accounted for 20.4% of the total traditional spend. Two generic medications replaced brand medications among the top 10 rankings. At 56.43, esomeprazole magnesium, the generic for Nexium, ranked number four by PMPY spend. The high cholesterol medication rosuvastatin, the generic for Crestor, which launched in May 2016, ranked ninth by PMPY spend. The top 10 medications accounted for 20.4 % of total traditional drug spend. Together, the two generics in the top 10 contributed 3.9% of the total traditional PMPY spend, with unit cost for esomeprazole declining by 44.5% in EGWP: TOP 10 TRADITIONAL DRUGS RANKED BY 2016 PMPY* SPEND TREND RANK DRUG NAME THERAPY CLASS PMPY SPEND % OF TOTAL TRADITIONAL SPEND UTILIZATION UNIT COST TOTAL 1 Lantus (insulin glargine) Diabetes % 2.5% -7.0% -4.5% 2 Eliquis (apixaban) Anticoagulants % 67.1% 2.0% 69.1% 3 Xarelto (rivaroxaban) Anticoagulants % 8.7% 9.0% 17.7% 4 esomeprazole magnesium Heartburn/ulcer Disease % 9.4% -44.5% -35.1% 5 Zetia (ezetimibe) High blood cholesterol % -5.3% 20.7% 15.4% 6 Lyrica (pregabalin) Pain/inflammation % 1.9% 10.1% 12.0% 7 Januvia (sitagliptin) Diabetes % 5.1% -6.1% -1.0% 8 Spiriva (tiotropium) COPD % -7.7% 1.6% -6.1% 9 rosuvastatin High blood cholesterol % 10 Advair Diskus (fluticasone/salmeterol) Asthma % -10.1% -0.6% -10.7% EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 22

23 Top 10 specialty drugs The top 10 specialty drugs accounted for 37.7% of PMPY spend for all Medicare specialty drugs in They represented only four therapy classes five oncology drugs, two for inflammatory conditions, two for MS and one for hepatitis C. Together, the five oncology medications in the top 10 contributed 17.1% of Medicare specialty drug spend. Harvoni (ledipasvir/sofosbuvir) was the only specialty drug in the top 10 that decreased in both PMPY utilization (-35.1%) and unit cost (-3.3%), to result in a total trend of -38.4% in Despite its decline, Harvoni alone contributed 6.2% of all Medicare specialty drug spend in Increased spending for Enbrel and Humira Pen was mainly driven by unit cost increases of 21.0% and 17.0%, respectively. Finally, while total trend for Copaxone declined (-6.3%), Tecfidera saw an increase of 7.5% in MEDICARE: TOP 10 SPECIALTY DRUGS RANKED BY 2016 PMPY* SPEND TREND RANK DRUG NAME THERAPY CLASS PMPY SPEND % OF TOTAL SPECIALTY SPEND UTILIZATION UNIT COST TOTAL 1 Revlimid (lenalidomide) Oncology % 11.3% 10.0% 21.3% 2 Harvoni (ledipasvir/sofosbuvir) Hepatitis C % -35.1% -3.3% -38.4% 3 Enbrel (etanercept) Inflammatory conditions % -3.6% 21.0% 17.4% 4 Humira Pen (adalimumab) Inflammatory conditions % 3.5% 17.0% 20.5% 5 Copaxone (glatiramer) Multiple sclerosis % -9.9% 3.6% -6.3% 6 Imbruvica (ibrutinib) Oncology % 41.1% 6.4% 47.5% 7 Ibrance (palbociclib) Oncology % 220.1% 6.3% 226.4% 8 Tecfidera (dimethyl fumarate) Multiple sclerosis % -4.4% 11.9% 7.5% 9 Xtandi (enzalutamide) Oncology % 10.7% 1.8% 12.5% 10 Zytiga (abiraterone) Oncology % -4.7% 7.6% 2.9% EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 23

24 MAPD Avonex (interferon beta-1a), an MS medication, replaced Zytiga in the top 10 drugs by PMPY spend. A decrease in utilization (-37.5%) and unit cost (-1.6%) for Harvoni resulted in the only double-digit negative trend (-39.1%) for a top 10 specialty medication. Use of several oncology medications is higher for MAPD beneficiaries, as seen in high utilization trends for Revlimid (13.4%), Imbruvica (51.8%) and Ibrance (234.4%). Use of several oncology medications is higher for MAPD beneficiaries as seen in high utilization trends for Revlimid, Imbruvica and Ibrance. Total trend for both Enbrel (1.9%) and Humira Pen (12.6%) was lowest among the three Medicare plan types. MAPD: TOP 10 SPECIALTY DRUGS RANKED BY 2016 PMPY* SPEND TREND RANK DRUG NAME THERAPY CLASS PMPY SPEND % OF TOTAL SPECIALTY SPEND UTILIZATION UNIT COST TOTAL 1 Revlimid (lenalidomide) Oncology % 13.4% 11.1% 24.5% 2 Harvoni (ledipasvir/sofosbuvir) Hepatitis C % -37.5% -1.6% -39.1% 3 Copaxone (glatiramer) Multiple sclerosis % -9.5% 5.8% -3.7% 4 Imbruvica (ibrutinib) Oncology % 51.8% 5.7% 57.5% 5 Enbrel (etanercept) Inflammatory conditions % -15.7% 17.6% 1.9% 6 Humira Pen (adalimumab) Inflammatory conditions % -4.7% 17.3% 12.6% 7 Ibrance (palbociclib) Oncology % 234.4% 7.6% 242.0% 8 Xtandi (enzalutamide) Oncology % 1.2% 1.9% 3.1% 9 Tecfidera (dimethyl fumarate) Multiple sclerosis % -16.4% 11.5% -4.9% 10 Avonex (interferon beta-1a) Multiple sclerosis % -11.9% 10.6% -1.3% EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 24

25 PDP Sovaldi (sofosbuvir), H.P. Acthar Gel (repository corticotropin) and Truvada (emtricitabine/tenofovir disoproxil fumarate) replaced three oncology medications Imbruvica, Xtandi and Zytiga in the top 10 rankings by PMPY spend. Two hepatitis C medications Harvoni and Sovaldi decreased in PMPY utilization, unit costs and total spend. H.P. Acthar, a product with multiple indications, declined in unit costs by 4.8%. However, due to a large 14.8% increase in PMPY utilization, it had a 10.0% total trend. Truvada was the only HIV medication to rank among the top 10 medications. Its trend was -7.7% as a result of a 12.7% decrease in utilization and a 5.0% increase in unit costs. Similar to its trend in MAPD plans, Ibrance had the highest increase in utilization (232.9%) and overall trend (240.7%) for PDPs among the top 10 specialty drugs. Truvada was the only HIV medication to rank among the top 10 specialty drugs for PDPs PDP: TOP 10 SPECIALTY DRUGS RANKED BY 2016 PMPY* SPEND TREND RANK DRUG NAME THERAPY CLASS PMPY SPEND % OF TOTAL SPECIALTY SPEND UTILIZATION UNIT COST TOTAL 1 Harvoni (ledipasvir/sofosbuvir) Hepatitis C % -35.8% -1.9% -37.7% 2 Revlimid (lenalidomide) Oncology % 9.1% 10.8% 19.9% 3 Enbrel (etanercept) Inflammatory conditions % 9.1% 22.5% 31.6% 4 Copaxone (glatiramer) Multiple sclerosis % -14.0% 3.0% -11.0% 5 Humira Pen (adalimumab) Inflammatory conditions % 17.5% 21.8% 39.3% 6 Tecfidera (dimethyl fumarate) Multiple sclerosis % 5.7% 11.8% 17.5% 7 Ibrance (palbociclib) Oncology % 232.9% 7.8% 240.7% 8 H.P. Acthar Gel (repository corticotropin) Central nervous system (CNS)/autonomic disorders % 14.8% -4.8% 10.0% 9 Sovaldi (sofosbuvir) Hepatitis C % -21.5% -1.7% -23.2% 10 Truvada (emtricitabine/tenofovir disoproxil fumarate) HIV % -12.7% 5.0% -7.7% EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 25

26 EGWP The top 10 medications accounted for 41.6% of the total specialty spend. Forteo (teriparatide) and imatinib replaced Harvoni and Tecfidera among the top 10 rankings. Forteo, an injection used for the treatment of osteoporosis, had a PMPY spend of and a total trend of 16.7%, mainly from a 15.6% unit cost increase. Forteo had a total trend of 16.7 %, influenced mainly by a 15.6 % unit cost increase. Imatinib, launched in February 2016 as a generic for the oncology drug Gleevec, is the only generic medication that ranked in the top 10 by PMPY spend (27.44). EGWP: TOP 10 SPECIALTY DRUGS RANKED BY 2016 PMPY* SPEND TREND RANK DRUG NAME THERAPY CLASS PMPY SPEND % OF TOTAL SPECIALTY SPEND UTILIZATION UNIT COST TOTAL 1 Revlimid (lenalidomide) Oncology % 11.8% 8.9% 20.7% 2 Enbrel (etanercept) Inflammatory conditions % -4.1% 20.9% 16.8% 3 Humira Pen (adalimumab) Inflammatory conditions % 2.4% 13.1% 15.5% 4 Imbruvica (ibrutinib) Oncology % 37.2% 7.1% 44.3% 5 Xtandi (enzalutamide) Oncology % 30.9% 2.4% 33.3% 6 Zytiga (abiraterone) Oncology % -3.2% 7.8% 4.6% 7 Ibrance (palbociclib) Oncology % 197.8% 5.1% 202.9% 8 imatinib Oncology % 9 Forteo (teriparatide) Osteoporosis % 1.1% 15.6% 16.7% 10 Copaxone (glatiramer) Multiple sclerosis % -9.5% 1.0% -8.5% EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 26

27 Trend comparison for Medicare and commercial populations The 4.1% overall increase in prescription drug spending for Medicare plans was slightly higher than the 3.8% trend for commercial plans. Medicare spending (3,694.09) was more than triple that of commercial plans (1,078.04). Medicare members had an average of 56.0 prescriptions PMPY while commercial members averaged only 13.8 PMPY.These stark differences in drug spend and prescriptions highlight the challenges of supporting an older, often sicker Medicare population. Trend for each of the top 15 classes moved in the same direction for both populations, except for medications used to treat pain/ inflammation and COPD. Pain/inflammation trend for Medicare decreased by 1.3% but increased 1.5% for commercial plans. Trend for COPD increased by 9.3% for Medicare but decreased by 5.1% for commercial plans. Medicare trend was moderately lower than commercial trend for five classes diabetes, pain and inflammation, inflammatory conditions, urinary disorders and HIV. MEDICARE VS. COMMERCIAL: COMPONENTS OF TREND FOR TOP 15 MEDICARE THERAPY CLASSES RANKED BY 2016 PMPY* SPEND MEDICARE COMMERCIAL RANK TYPE THERAPY CLASS PMPY SPEND TOTAL TREND PMPY SPEND TOTAL TREND 1 T Diabetes % % 2 S Oncology % % 3 T Pain/inflammation % % 4 T High blood cholesterol % % 5 T High blood pressure/heart disease % % 6 T Mental/neurological disorders % % 7 S Inflammatory conditions % % 8 T Asthma % % 9 S Multiple sclerosis % % 10 T Anticoagulants % % 11 T Heartburn/ulcer disease % % 12 S Hepatitis C % % 13 T Urinary disorders % % 14 T Chronic obstructive pulmonary disease (COPD) % % 15 S HIV % % TOTAL FOR ALL THERAPY CLASSES 3, % 1, % S = Specialty, T = Traditional EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 27

28 The biggest differences in trend for the two populations were seen for mental and neurological disorders (-12.9% for Medicare vs % for commercial) and heartburn and ulcer disease (-10.0% vs %). The decline in spend for high blood cholesterol medications was less for Medicare plans (-2.2%) than for commercial plans (-7.4%). However, trend for asthma medications among Medicare beneficiaries (4.3%) was more than that for commercially insured patients (0.7%). Specialty class trends for Medicare plans were consistent with those for commercial plans. Both had double-digit trend for three of the five specialty classes oncology, inflammatory conditions and HIV. The only specialty class trend decrease among the top 15 classes for both Medicare and commercial plans was hepatitis C (-27.2% and -34.0%, respectively). With the exceptions of HIV and inflammatory conditions, all of the specialty classes in the top 15 had higher trend for Medicare than for commercial, due to the higher prevalence of the conditions those medications treat among older adults. CMS regulations that inhibit Medicare plan sponsors from implementing programs that might affect trend to a greater degree may also have played a role in the higher Medicare trend. The biggest differences in trend for the two populations were seen in mental/neurological disorders and heartburn/ulcer disease. EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 28

29 Methodology EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 29

30 Methodology Prescription drug use data for Medicare members with drug coverage provided by Express Scripts plan sponsors 11 was analyzed for the 2016 Drug Trend Report. The Medicare plan sponsors providing the pharmacy benefit paid at least some portion of the cost for the prescriptions dispensed to their members, providing what is known as a funded benefit. Both traditional and specialty drugs are included. Specialty medications include injectable and noninjectable drugs typically used to treat chronic, complex conditions and may have one or more of the following qualities: frequent dosing adjustments or intensive clinical monitoring; intensive patient training and compliance assistance; and limited distribution and specialized handling or administration. Nonprescription medications (with the exception of medical supplies billed under the pharmacy benefit) and prescriptions that were dispensed in hospitals, long-term care facilities and other institutional settings, or billed under the medical benefit, are not included. by dividing totals by the total number of member-months (which is determined by adding the number of months of eligibility for all members in the sample) multiplied by the number of months per period. Please note: Although up to nine decimal places were allowed in making all calculations, in most cases the results were rounded down to one or two decimals for easier reading. Therefore, dollar and percentage calculations may vary slightly due to rounding. Trend and other measures are calculated separately for members with coverage for Medicare beneficiaries. Medicare beneficiaries included in this analysis received their prescription benefits from the following plan types: Medicare Advantage Prescription Drug plans (MAPDs), Prescription Drug Plans (PDPs) or Employer Group Waiver Plans (EGWPs). Total trend measures the rate of change in gross costs, which include ingredient costs, taxes, dispensing fees and administrative fees. Gross cost includes member cost share and is net of rebates. Total trend comprises utilization trend and unit cost trend. Utilization trend is defined as the rate of change in total days supply of medication per member, across prescriptions. Unit cost trend is defined as the rate of change in costs due to inflation, discounts, drug mix and member cost share. Utilization and cost are determined on a per-member-per-year (PMPY) basis. Metrics are calculated 11 Plan sponsors were excluded if they were not Express Scripts clients in both 2015 and 2016, if they had less than 12 months of claims data in either year, if they had retail-only benefits or home delivery-only benefits, if they had 100% or 0% copayment benefits, if they had eligibility shifts exceeding 50% or if they were contractually prohibited from inclusion. Individual members might be covered, and thus included, for only a portion of the time periods of interest. EXPRESS SCRIPTS 2016 DRUG TREND REPORT MEDICARE 30

31 2016 Drug Trend Report Get the insights: express-scripts.com/corporate Click to share: 2017 Express Scripts Holding Company. All Rights Reserved. Express Scripts and E logo are trademarks of Express Scripts Holding Company and/or its subsidiaries. All other trademarks are the property of their respective owners. 16EME38524 FEB. 2017